The phases of the procurement process

Selection, assessment and controls

05/04/2017 - 04:45 PM

The selection of the TIM Group’s suppliers involves a pre-contractual qualification stage in which the economic/financial and technical/organisational characteristics are assessed. If the result of this assessment - which also includes an evaluation of their business ethics and respect for human rights, workers’ rights and the environment - is positive, the suppliers are registered on the Group Supplier Register.

In all the contracts signed, there is a specific clause which makes it mandatory for the supplier to accept the principles expressed in the Group’s Code of Ethics and Conduct.

As regards the domestic operations, the Italian suppliers on the Register with considerable value (the threshold is 3,000 euros cumulative per year) receive an initial screening in relation to respect for the principles of the Code of Ethics and are subject to regular assessment. The action taken by TIM to verify suppliers varies depending on the riskiness of the supplier and the value of the purchase, ranging from simple to complex questionnaires and document checks to inspections at the supplier’s premises and specific audits on sustainability matters.Specifically, in 2016 100% of new suppliers enrolled in the Register signed a specific questionnaire in which they undertook for themselves and for any authorised subcontractors, collaborators and employees to observe the principles of behaviour contained in the Group’s Code of Ethics and Conduct. In 2016, in Brazil, such percentage was 99%.

While the supply is taking place, registered companies which have received purchase orders normally undergo incoming quality control checks (a requirement for the acceptance and use of the purchased goods) and monitoring of the vendor rating. Environmental and social checks are also carried out. In particular, checks on Health & Safety and on the environment are carried out, and their results are part of the supplier’s rating, to which the penalty/incentive system is linked. Also, checks are held concerning compliance with labour laws.

The purchasing departments focus on specific sectors, so as to provide accurate responses to the requirements of internal customers and stakeholders. These expectations are constantly monitored through surveys of both internal customers and suppliers in order to verify the quality of the services delivered.

Purchases by TIM take place mainly in the two geographical areas where the Group’s major operations take place, i.e. Italy and Brazil, and are mostly directed at the following categories of products/services:

Telecom networks

Telecom products

Information Technology

Technical and Professional Services

Power

Others.

Information on purchases made in 2014, 2015 and 2016, grouped by Business Unit and product/service type, is available in the Group purchase tables.

In total, in 2016 there were 5,538 suppliers which had purchase orders with the Group, (-16% compared with 2015 and -18% compared with 2014), of which 4,125 were for the domestic BU (+13% compared with 2015 and +18% compared with 2014), 1,419 for Brazil (-24% compared with 2015 and -33% compared with 2014).

For some sectors, the Group also measures and monitors subcontracting suppliers; in particular for network works; there were 884 subcontracting businesses (+8% compared with 2015 and +18% compared with 2014). In this sector, therefore, the estimated total number of suppliers involved in the supply chain is 910.

In the last three years no significant changes have occurred in the structure of the Group’s supply chain.

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